Tuesday, 13 October 2015

Council Amalgamations - Are Councils "Fit for the Future" or are they being "Fitted up"?

Labor's Shadow Minister for Local Government Peter Primrose MLC today at the NSW Annual Conference in a very thought provoking speech, really nailed it. It exposed the failed logic and suggested the real motivation behind Mike Baird and his governments attack on local councils. I could not do justice to Peter's speech so I publish it in full below.

"Thank you very much for your invitation to speak here today.

I doubt that anyone here doesn’t believe local government can do better. But the same applies to state and federal government, and the private sector.

Labor has already begun the process of developing and announcing its local government policies, rather than simply being reactive. For instance while Labor has already banned property developers from standing as Labor candidates at any level of government, Labor Leader Luke Foley has now called on the Premier to legislate to ban developers and real estate agents from standing at all future council elections. He has also called for campaign spending and political donations to be capped in council elections, just as it is at state elections.

Destination 2036 was the product of a genuine process of consultation. The Government met with Mayors and General Managers to work out how things could be done better.

Then for reasons people still are not totally clear, T Corp – which essentially has the job of buying and selling debt – also got involved in assessing local councils.

Then there was the under resourced Independent Local Government Review Panel. Its 65 recommendations highlight reforms that we should examine closely and that we all should take seriously, not just those few dealing with mergers and amalgamations.

Even the highly respected author of that report, Professor Samson, has publicly criticised the government for being obsessed with forced mergers at the expense of other his other proposed reforms.

Most recently, the chaotic Fit for the Future programme has seen IPART assessing costly reports prepared by councils to justify their continued existence, but unable to provide the parliamentary committee with any details about precisely what models and algorithms are being used to compare and assess councils.

And until yesterday the Government had steadfastly maintained the position that councils would not be allowed to see what IPART said about them, because the whole process and the report would be kept secret. Of course, we always knew that we would learn bits of what was in it, when selected leaks to the media started appearing bagging local councils as being unfit and deserving to be sacked.

One thing – I am not aware of any rallies or public meetings that have been organised anywhere by citizens demanding that their councils be forcibly amalgamated. That has to tell you something about the public sentiment.

I have been joining with local community groups to demand that councils should be able to view the IPART determination and present their case to the Government as a ‘right of reply’, prior to the Government making any final decisions about their future. While the Premier still seems uncertain about the details, I am pleased that in his address yesterday that he seems to be heading in roughly the same direction. But as always, the details remain elusive. The Minister today seemed to be suggesting it will not a right of reply, but rather simply a last chance to voluntarily amalgamate rather than be forced.

The Government should allow any council deemed ‘unfit’ to put forward an alternative proposal to being forced to amalgamate. For instance, instead of blocking proposals for innovation, the Government should be encouraging councils in the Sydney metropolitan area who wish to do so, to combine with neighbouring councils in a joint organisation model.

Can I be very clear about one thing - Labor supports structural reforms such as amalgamations, but only where they have demonstrated local support and there is a good business case. They must be voluntary. Our clear and unambiguous policy is that Labor does not support forced amalgamations.

Yesterday Mike Baird told you that he supports very large councils, and that bigger is better. Without a scrap of evidence, indeed despite the research evidence, he maintained the fiction that rates would go down, more infrastructure would be built, and there would be free ice cream and fresh scones for all if only councils were made much larger. No one has yet been able to explain how forcibly merging two or more struggling councils does anything more than just create one big council with even bigger funding issues.

The Premier is not evil. But he is just not listening to academic experts. He’s not listening to Local Government NSW. He’s not listening to experienced general managers. He’s not listening to the great majority of dedicated local councillors. And he is certainly not listening to the many community organisations and residents. They are all saying with one clear voice – Mr Premier, there is just no evidence that bigger is better. It doesn’t matter how many times you and your Minister repeat the claim, there is just no evidence. There should be no forced amalgamation.

If Mike Baird pushes ahead with non-voluntary amalgamations, we will work with local councils and the community to oppose him. The Labor Opposition will fight to maintain due process through the Boundaries Commission process, which the government has already threatened that it wants to ‘streamline’. This process should include Local Government representation and reflect all the factors that the Boundaries Commission must consider in the current Local Government Act, including employment, local values, financial disadvantage and community identity.

In particular, community views must be strongly considered and rigorously canvassed by the Boundaries Commission when it considers amalgamation proposals. Any legislative changes being considered by the Government regarding amalgamations should be released immediately to allow time for the community and the Local Government sector in particular, to be consulted.

Specific infrastructure such as Local Water Utilities should remain in the hands of the local councils which own them as these utilities contribute significantly to the strategic capacity of councils.

As a former Shadow Minister for Finance, my take on the purpose behind this muddled process is pretty simple. Fit for the Future is just part of a financial fix for the state government.

It’s not really about making local government more efficient, any more than it has been about genuine consultation with key stakeholders to get the best outcomes.

Remember the recent cog ads the Baird Government ran about how local government was “broken” and needed fixing? These ads were not the product of a government wanting to consult anyone. They were about convincing a sceptical public that local government in NSW deserved to be punished as it wasn’t up to doing the job.

The ads were totally political and totally meaningless. But despite the obfuscation we did eventually find out how much they cost the public of NSW. The Minister finally answered my question on notice – the cost was $730,307 for advertising space, and $262,474.30 for the so called creative development. That’s a million dollars wasted on some pretty tawdry propaganda.

I will ask you this - how ‘Fit for the Future’ do you think the NSW Government would be if the Federal Government had frozen its GST payments, and at the same time loaded it up with a pile of additional responsibilities? At the very least, the NSW Government today should be leading the charge to have the Federal Government unfreeze the indexation of financial assistance grants.

The most recent cost shifting survey by Local Government NSW has identified a financial burden of $520 million per year being placed on councils as a direct outcome of cost shifting.

And this is the crux of my problem with Fit for the Future. It’s all really about moving more debt onto local government and off the books of the state government. The state government knows like everyone else that there will be an inevitable reduction in its recurrent finances over the next couple of years as the property market starts to cool.

That’s how markets work. But unlike in the past, this time the government won’t be able to rely on the profits coming from state owned corporations to help its budget position, because these are being privatised.

Think about what the Minister has promised.

Bigger and better councils which are Fit for the Future will be given additional responsibilities to match their improved status. Roads, maintenance of infrastructure and recurrent services that were previously the responsibility of the state will be handed over to these shiny new super councils.

The Minister has also promised that to pay for these new responsibilities, these new mega-councils will be able to borrow money from T-Corp. But of course the councils will have to pay back the loans of course, with interest along with T-Corp’s service fee.

So how do you pay it back? Well, the Minister has also promised to make it easier for these new councils to get a rate variation through IPART. So councils will be able to raise rates, to pay T-Corp for the loans they have had to take out, to pay for additional responsibilities cost-shifted onto them by the state government.

That’s what Fit for the Future is really all about. It’s not about being made fit for the future - it’s really just about being fitted up for the future.

I will not stand before you today and promise that a future Labor Government will abolish rate pegging. It remains a bi-partisan policy, and I am not going to mislead you. But before anyone starts threatening forced amalgamations or sackings, we should have a complete review of how local government is funded in New South Wales.

The state government set the financial benchmarks that councils were required to meet to be deemed Fit for the Future. These benchmarks were highly controversial. The government needs to be open and transparent about cost shifting, and really needs to listen to what local government is saying about finances.

There is no magic bullet, and we may not all agree with the outcomes. But if the Premier agrees and we begin going down this road instead of the dead end of Fit for the Future, Labor will walk with him, as I believe will the whole of the local government community.

We need to begin that process by properly and honestly examining the rampant cost shifting by other levels of government onto local government. Otherwise the outcome of any reform process will be a wasted opportunity to ensure local government can deliver the services that local residents really want and need.

About Ron Hoenig

Ron Hoenig MP is the State Member for Heffron in the NSW Parliament.
He was elected to Parliament at a by-election on the 25 August 2012.
Prior to entering Parliament he was the Mayor of the City of Botany Bay, a position he held for more than 30 years. He was, and still is regarded by many as one of the most progressive Mayors in the Sydney metropolitan region.
He is a barrister and prior to entering parliament was a Public Defender for the State of New South Wales.
Ron Hoenig was born in Sydney and raised in Eastlakes, attending Eastlakes Public School, Daceyville Public School and The J.J. Cahill Memorial High School in Mascot.